Digital Brands Group, Inc. (NASDAQ:DBGI), a retailer specializing in apparel and accessories with a market capitalization of just $3.06 million, received a notification from The Nasdaq Stock Market LLC on Monday, December 16, 2024, indicating that the company's common stock will be delisted.
According to InvestingPro data, the company's overall financial health score is rated as WEAK, with significant operational challenges. The delisting is scheduled to take effect at the open of trading on Wednesday, December 18, 2024. The company's securities are expected to transition to the OTC Pink Market, retaining the symbol "DBGI".
The Nasdaq Hearings Panel determined the company's non-compliance with several Listing Rules, specifically Rule 5550(a)(2) related to bid price, Rule 5550(b)(1) concerning shareholders' equity, and Rule 5635 which pertains to shareholder approval requirements.
The delisting comes amid a challenging period for the company, with InvestingPro data showing a steep 97.58% year-to-date decline in stock price and revenue contraction of 32.81%. Digital Brands Group has a 15-day period following the receipt of the Panel's decision to request a review by the Nasdaq Listing and Hearing Review Council, which may also opt to review the Panel's decision within 45 calendar days autonomously.
This development follows the company's strategic efforts to comply with Nasdaq's continued listing standards. Digital Brands Group has expressed its anticipation that its common stock will remain available for public trading on the OTC Pink Market.
The company faces significant financial challenges, with InvestingPro analysis revealing a concerning current ratio of 0.29 and substantial debt burden. The company's forward-looking statements suggest plans to ensure stock quotation post-Nasdaq listing, although these statements are subject to various risks and uncertainties as outlined in the company's SEC filings.
The information in this article is based on a press release statement from Digital Brands Group and reflects the company's current expectations regarding future events. Investors are advised to review the risks detailed in the company's SEC filings, including its most recent Annual Report on Form 10-K, to fully understand the potential impact of these developments.
In other recent news, Digital Brands Group, an apparel retailer, has implemented a 1-for-50 reverse stock split, a move approved by stockholders during the company's virtual annual meeting. The company is facing significant financial challenges, as indicated by a Financial Health Score of 1.11 out of 10 from InvestingPro. The reverse stock split aims to help the company maintain compliance with Nasdaq's minimum bid price requirement.
In a strategic shift, Digital Brands Group is focusing on growth initiatives after a 33% year-over-year revenue decline and a high debt-to-equity ratio. The company reported a decrease in net revenue to $2.4 million in its third quarter 2024 earnings call, mainly due to the discontinuation of a low-margin wholesale account. However, the company's net loss improved to $3.5 million from $5.4 million year-over-year.
Despite these challenges, the company has managed to temporarily raise its stockholders' equity above the $2.5 million threshold through various transactions. These are recent developments, reflecting Digital Brands Group's efforts to maintain financial health and market position.
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